Unlock Revenue Growth by Understanding Interconnected Metrics

Understanding how customers behave and make purchases is crucial to boost earnings. At Radikal, we realized the importance of digging deep into key metrics to enhance our client’s revenue strategy. We compiled all the metrics from our clients and divided them into segments to have a broader view of the performance of the segment they belong to. This approach highlighted the codependency of these metrics, emphasizing the importance of analyzing them collectively rather than individually.

In this article, we will further discuss how we interpreted the final results and why looking at metrics as a system is fundamental in assessing the performance of your marketing efforts.

Introduction to Key Metrics

Let’s delve into the most important metrics that showcase the way customers engage with your online store:

1. Conversion Rate (CVR) is the percentage of website visitors who make a purchase. This metric directly reflects how effective your website is at turning visitors into customers.

2. Average Order Value (AOV) is the average amount a customer spends in a single transaction on your website. AOV provides insights into customers’ spending habits and helps you identify the high-spending profiles.

3. Revenue Per Visitor (RPV) is a crucial metric that measures the average amount of revenue generated for each visitor to your website and, therefore best indicator of your revenue. Formula: RPV = CVR x AOV

Analyzing Metrics as a System

We gathered all the important numbers from our clients’ activities in 2023 and organized them into segments. Here’s a concise table for a clear overview of their performance:

A detailed review of the table underscores the importance of considering metrics together rather than individually. For example, focusing solely on Conversion Rate (CVR) might suggest suboptimal performance in the fashion category. However, taking into account both Revenue Per Visitor (RPV) and Average Order Value (AOV) reveals a positive overall performance due to AOV.

Interestingly, there is a consistent balance observed between CVR and AOV. This gives us an insight into the buyer’s psychology: higher-priced items often entail more thoughtful consideration and result in less impulsive purchases. For instance, the jewelry category exhibits the lowest CVR but the highest AOV.

In a notable observation, four out of our top five clients with the highest CVR maintain an Add-to-Cart Churn below 40%. Improving this churn is identified as an efficient strategy for enhancing conversion rates and, consequently, increasing revenue. Luckily, Shopify has the highest converting checkout, but it’s important to focus on reducing add-to-cart drop-offs earlier in the conversion funnel.

How did we boost these metrics?

To enhance our clients key metrics, we implemented the following targeted strategies:

  • For Conversion Rate (CVR), we focused on improving the user experience (UX) on Product Display Pages (PDP). This involved isolating the add-to-cart button as the primary Call-to-Action (CTA), enhancing transparency, and seamlessly integrating customer reviews.
  • For Average Order Value (AOV), we introduced effective practices such as offering product bundles, incorporating upsell options during the checkout process, and implementing personalized cross-selling suggestions.

It’s worth mentioning that the Conversion Rate displayed in the Shopify Analytics dashboard may not always be entirely accurate. For a more precise calculation, we recommend manually determining the Conversion Rate by dividing your online sales channel orders by your store sessions. This method ensures a more reliable and accurate representation of your conversion performance.

Are your metrics lagging?

If you find that your metrics aren’t where you want them to be and you are wondering how to boost your webshop’s performance, we can make it happen.

Reach out to us on hello@radikal.io and let’s work together to amp up your marketing game.

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